Canada - Commercial Guide
Automotive

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-08-03

Overview

Canada is the second largest automotive market in North America. Imports represent approximately three quarters of the market. Most global vehicle manufacturers are present in Canada including five of them with local assembling lines: Ford, General Motors, FCA, Toyota, and Honda. In addition to auto sales, the automotive aftermarket annual retail value is estimated by the industry at over US$19 billion.

Local manufacturing is higher than total imports with approximately three quarters exported. The total annual value of Canadian automotive sector imports, on a 12-month rolling period, recorded a slow increase in 2018, but ending .4% lower in 2019 than previous year. The import of passenger vehicles decreased by 5% to US$28.4 billion, while imports of trucks and other vehicles for the transport of goods went up by 10% to US$15.5 billion. The imports of buses and other public transport vehicles decreased 10% to US$886 million. In 2019, Canadian import of automotive parts and components totaled US$18.5 billion. The United States share in the total Canadian automotive import market remains stable at approximately 65%.

The new light vehicles market (passenger cars and light trucks) decrease 3.6% to 1.914 million units in 2019 for the total number of units sold in Canada recorded, of which 40% were U.S. brands. Passenger cars sales remain at about 30% of units sold while 70% are light trucks. Electric vehicle sales in 2019 continued to grow, reaching 85,500 units in total sales, of which 40% were battery electric (BEV) and the rest plug-in hybrid (PHEV). The passenger cars market in retail sales registered a Consumer Price Index (CPI) for 2019 up 2.5%. The overall inflation for 2019 in Canada registered a CPI of 1.9%.

The market drivers are a combination of consumer demand fueled by a stable economy and decrease in gasoline prices in 2019, combined with a shift in the North American market structure. Since 2018 the vehicles manufacturers accelerated the resizing of their capacities in Canada and in 2019 even closed some assembly lines. Some increase in import of new vehicles was offset by the reductions of imports of assemblies and components for the assembly lines.

The regulatory environment in Canada for the automotive sector is similar to that of the United States, and approximately over 90% of the two countries’ road-safety regulations are harmonized.

 Table: Canada Automotive Market Data (US$ Millions)

 

2017

2018

2019

2020 (Estimate)

Total Local Production

      76,238

     74,249

     73,748

65,636

Total Exports

      61,026

     58,511

     58,715

52,257

Total Imports

      71,531

     72,389

     71,393

63,539

Imports from the US

      46,634

     46,740

     46,559

41,437

Total Market Size

      86,743

     88,128

     86,425

76,919

[Total Market Size = (total local production + imports) – exports]

Source: Statistics Canada reports in US$

Exchange Rate 2019 annual average: US$1 = C$1.327 (April 6, 2020 spot: US$1 = C$1.41)

Potential impacts of COVID-19

Statistical data available for only first two months of 2020 show the annual market (12 months rolling) at Feb 2020 with only a 1.6% decrease but the economic activities started to close beginning March 2020. Vehicle sales registered a 48% decrease in March 2020 compared with same month of previous year. The significant impact is already affecting more sectors of the economy, especially manufacturing. In Ontario, where more than 90% of the Canadian automotive sector is located, the automotive manufacturing sector was declared essential and was not closed by the government during anti-pandemic measures. However, due to a combination of safety measures for the work force and drop in market demand, vehicle manufactures stopped assembly lines beginning March 2020. As a consequence, Tier 1 and 2 manufacturers reduced their manufacturing to strict necessities. Notably, many of these manufacturers have switched some capacities to the production of medical supply.

 The total market forecast for 2020 is estimated at 11% decrease compared with 2019, based on a 12-month rolling evaluation calculated with a rebound from June compared to the previous year. But the main driver, consumer confidence and demand, may come back slower.

The aftermarket segment will continue however to remain strong due to the large size of vehicles registered on the road. Components and parts will remain strong and provide many opportunities for U.S manufacturers.

Leading Sub-Sectors

· Trucks and Other Vehicles for The Transport of Goods (US$15.5 billion)

· Motor Vehicle Assembly Components and Parts (US$18.5 billion)

· Motor Vehicles for Special Non-Transport Purposes (US$947 million)

Opportunities

A large number of market players represent significant opportunities. Canadian Tier 1 and 2 automotive manufacturers have very large supply chains to cover a large variety of high-tech needs for their processes. They are building automotive assemblies and systems in locations in Canada and worldwide. The largest of them, Magna International, is one of the world’s top manufacturers and is also assembling complete vehicles for companies like Mercedes, BMW, and Chrysler. There is also a very strong industry organization, the Automotive Parts Manufacturers Association (APMA).

Advanced technology clusters are also significant opportunities. One such example is the autonomous vehicle cluster Kanata North Business Association. Several municipalities are already developing related programs.

2020 will continue to present opportunities mainly in the components and parts segment. Example of dynamic sub-segments including Canadian imports of:

· Gear Boxes (Transmissions) and Parts - US$ 2.9 billion (up 1.5%)

· Drive-Axles with Differential and Parts - US$ 1.2 billion (up 8.1%)

· Silencers (Mufflers) and Exhaust Pipes and Parts - US$ 513 million (up 1%)

· Clutches and Parts - US$ 292 million (up 4.1%)

· Motor Vehicle Parts, not elsewhere specified - US$ 3.5 billion (up 1.1%)

Resources

Major Events and Trade Shows in Canada

· Automotive Parts Manufacturers Association Annual Conference and Exhibition, Windsor, Ontario, June 2020

· Truck World, Toronto, Ontario, September 24-25, 2020

· Montréal International Auto Show, Montréal, Québec, January 2021

· Canadian International Auto Show, Toronto, Ontario, February 12-21, 2021

· SelectUSA Manufacturing Forum, U.S. Commercial Service Event, Canadian International Auto Show, Toronto, Ontario - February 12, 2021

· Montreal Electric Vehicle Show, Montréal, Québec, April 23-25, 2021

Industry Associations

· Automotive Industries Association of Canada:       www.aiacanada.com

· Automotive Parts Manufacturers’ Association:      www.apma.ca

· Kanata North Business Association:       www.kanatanorthba.com

Additional Resources

· Transport Canada:       https://www.tc.gc.ca/en/transport-canada.html

· Statistics Canada:       www.statcan.gc.ca/start-debut-eng.html

· DeRosiers Automotive Consultants:      www.desrosiers.ca

· FleetCarma:       www.fleetcarma.com

Commercial Service

· For additional information on this sector, please contact Commercial Specialist Stefan Popescu at Stefan.Popescu@trade.gov or by phone at (416) 595-5412, Ext. 223.